The company will then follow up with the Breezehouse, with a different floor plan, in early 2011. Both homes are based on original designs from Kaufmann.

The homes are made with green building materials like bamboo and can be equipped with solar panels. What really makes the homes green, however, is how they are built and their energy efficiency. Rather than build the home on location on top of a foundation, the homes are built in factories. Factory building leads to less waste and lower transportation costs. The homes can also be sealed like a drum with precision construction -- the wood isn't sitting outside where it can warp or gather mold spores -- and foam insulation, leading to lower energy bills in the future.

Modular homes are often status symbols in countries like South Korea or Japan. See a video here of Panasonic's model green home. In the U.S., however, 'modular' means 'mobile home' to most consumers. That may change. Zeta Communities in the S.F. Bay Area is building modular town homes, while Project Frog is erecting modular schools and public buildings. Zeta last year opened a factory capable of producing 300 to 400 homes annually.

Design-wise, these modern homes are pretty snazzy. Here's a video of Zeta's beta in Oakland. West Coast Green will showcase a number of home innovations next month in San Francisco. In terms of cost, the homes also end up being roughly on par with conventional homes; Kaufmann went through a lot of the issues in this interview.

Still, most of these companies face an uphill battle. The mortgage debacle has lead to declining real estate prices and a plethora of homes waiting for buyers. Modular home builders have also had a difficult time raising money from investors.